REAL ESTATE APPRECIATION CONTRACT

• US 20090037328A1
• Filed: 07/03/2008
• Published: 02/05/2009
• Est. Priority Date: 07/05/2007
• Status: Active Grant

• Current Assignee: Nextgena LLC
• Original Assignee: Nextgena LLC
• Inventors: Abuaf, Alvi
• Granted Patent: US 8,219,471 B2
• Time in Patent Office: Days
• US Class Current: 705/40
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A method and system for providing a contract between a property purchaser, e.g., the purchaser of a house, co-op or condo, and an investment fund in which a down payment or other financing is provided to the buyer from the fund in return for a portion of the capital appreciation of the real estate asset. The contract may be grouped with other such contracts and traded in an electronic market. Upon maturity or earlier sale of the property, a portion of the appreciated value of the property paid back to the Fund.

Claims

1. A method of operating a financial fund to share in the appreciation in the value of real estate in return for a payment by the fund, comprising the steps of:

receiving at a fund server an electronic request from an owner or prospective owner of real estate for the payment;

assessing the credit worthiness of the owner;

if the owner is sufficiently credit worthy, electronically providing to the owner a contract between the fund and the owner having various terms and by which the fund is guaranteed a share of the appreciation in the value of the real estate in return for the payment;

executing the contract with the owner and storing a copy in a database connected with the fund server;

making the agreed payment to the owner;

subsequent to entering the contract, realizing the appreciation in the value of the real estate by converting it into a liquid asset; and

receiving the value of the guaranteed share of the appreciation from the liquid asset.

2. The method of claim 1 wherein the owner is a prospective purchase of the real estate and the payment to the owner is for the down payment on the purchase of the real estate.

3. The method of claim 1 wherein the owner is an existing owner of the real estate and the payment to the owner is for personal use.

4. The method of claim 2 wherein the prospective owner is securing a first mortgage on the real estate and the step of assessing the credit worthiness of the owner involves reliance on a credit check conducted by the organization issuing the first mortgage.

5. The method of claim 1 wherein the step of realizing the appreciation in the value of the real estate is achieved by selling the real estate.

6. The method of claim 1 wherein the step of realizing the appreciation in the value of the real estate is achieved by marking the property to market and refinancing the real estate.

7. The method of claim 1 wherein the period subsequent to entering the market is fixed in the contract.

8. The method of claim 1 wherein the guaranteed share of the appreciation is variable depending on at least the assessment of credit worthiness.

9. The method of claim 1 wherein the fund executes a plurality of contracts with different owners, and further including the steps of grouping the contracts and selling interests in the contract groups to investors.

10. The method of claim 9 wherein information about the plurality of contracts is stored in the fund server database along with information about the interests of the investors in the fund.

15. The method of claim 10 wherein individual investors have access to fund information from client computers accessing the fund server over the internet.

16. The method of claim 15 whereby the investors can buy or sell interests in classes of contracts as part of an electron secondary market, and the fund server keeps track of the transactions and stores them in the database.

17. The method of claim 1 wherein the terms of the contract are automatically calculated by an application running on the fund server based on the owners credit, the valuation of the real estate, the projected real estate appreciation, information from financial institutions issuing first mortgages and information in the application request from the owner.

18. The method of claim 10 in which an investors pro rata share in the value received by the fund from a contract is automatically calculated by an application running on the fund server.

19. The method of claim 4 further including the step of monitoring the owners payment on the first mortgage through electronic access to the owner'"'"'s payment history and credit status information.

20. The method of claim 19 wherein the credit worthiness of the owner is periodically calculated by an application running on the fund server based on the owner'"'"'s payment history and credit status information.

21. The method of claim 1 further including the step of monitoring condition of the real estate after the payment is made.

11. The method of clam 10 wherein the fund tracks real estate appreciation in various geographical and/or price markets and stores the information in the database.

12. The method of claim 11 wherein the guaranteed share of the appreciation is variable depending on at least the information on the real estate appreciation in the geographical and/or price market for the real estate covered by the contract.

13. The method of claim 12 wherein the guaranteed share is calculated by an algorithm run on the fund server.

14. The method of claim 11 wherein the real estate appreciation information is received by the fund server over the internet.

22. A system operating a financial fund to share in the appreciation in the value of real estate in return for a payment by the fund, comprising a fund server that receives over a telecommunications network electronic requests generated at client computers from owners or prospective owners of real estate for the payment, said fund server accessing credit information on owners;

a fund database for storing information received by or generated by the fund server;

an application running on the fund server for assessing the credit worthiness of the owner based on said credit information and providing to a user interface at the owner client computer a contract between the fund and the owner having various terms and by which the fund is guaranteed a share of the appreciation in the value of the real estate in return for the payment;

wherein the terms of the contract are determined by the application based on the owners credit worthiness, a valuation of the real estate, projected real estate appreciation, information from financial institutions issuing first mortgages and information in the application request from the owner.

23. The system of claim 22 wherein the fund server further provides access to the fund database to investors in the fund operating from investor client computers.

24. The system of claim 23 wherein the fund server runs an application that allows investors in the fund to buy and sell interests in the fund.

25. The system of claim 23 wherein the fund server runs an application that allows investors to view their interest in the fund.